1. Tax Software Development in a Multi-Jurisdictional Environment
John Glaubitz, Vertex
Chair, OASIS TaxXML Business Analysis Subcommittee
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Agenda
Tax Compliance
Information Exchange in Compliance
The Role of Tax Software Solutions
Issues and Challenges
Standardization and Semantic Interoperability
Benefits
Approach
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13th XBRL International Conference

3. Tax Compliance Processes
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Cost of Tax Compliance
Costs result from gathering, manipulating, registration, retention and provision of information.
Consequences to business and government for untimely or incorrect tax returns.
Complexity of meeting compliance obligations may require the help of tax specialists or intermediaries
Cost and complexity of compliance can be a barrier for businesses to enter the market
Costs of compliance can raise the price of products.
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13th XBRL International Conference

5. Information Exchange to Support Tax Compliance Processes
Tax compliance involves exchanges of information to facilitate each of the processes that may be B2B(C), B(C)2G, G2B(C) or G2G
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13th XBRL International Conference

6. Tax Compliance Process Example
Tax Registration Process
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13th XBRL International Conference

7. Communication through Messages
Business processes are facilitated by information communicated through messages
Common processes can utilize common discrete messages.
Communication relies on agreement of meaning and content between parties
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13th XBRL International Conference

8. Software Solution Within Tax Compliance
A software developer needs to provide solutions for many potential combinations of businesses and taxing jurisdictions
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13th XBRL International Conference

9. Diversity in Tax Software
Combinations become more diverse with the inclusion of multiple ERP’s used by businesses across multiple tax types.
25/02/2019
13th XBRL International Conference

10. Role of Software Solution in Tax Compliance
Deliver functionality to facilitate business processes
Buffer the Customer from complexity
Assume the burden of dealing with diversity
Handle impact of new Technology, Security requirements and Compliance requirements
Minimize total cost of Compliance
25/02/2019
13th XBRL International Conference

11. Software Solution Challenges
Provide a tax compliance solution that:
Minimizes Ambiguity
Enables Tracability
Enforces Security
Provides Completeness of Requirement
Is Adaptable to new requirements
Is Cost Effective
Handle the diversity of terminology and meaning across the various Jurisdictions, ERP’s, Business Verticals, Tax Types and Tax processes.
25/02/2019
13th XBRL International Conference

12. Semantic Interoperability
Equal terms may have different meanings within different regulations
Different terms may have the same meaning.
For efficient exchange of information it is necessary to agree upon the syntax and semantics (meaning) of terms
There is a penalty for misinterpretation
Challenge is to standardise in a manner that both allows compliance within existing regulation and adheres as much as possible to the existing business processes.
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13th XBRL International Conference

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Semantic Layers
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Taxonomy
A system for naming and organizing terms into groups that share similar characteristics
Used as a classification method, typically a hierarchy, and provide some meaning imbedded in the structure
Clear definition of the meaning of terms used and the relation between terms
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13th XBRL International Conference

15. Netherlands Taxonomy Project Architecture
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Common Interfaces
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Benefit to Software
Greater Consistency
Less Complexity
Externalize Interface Development
Focus on Core Functionality
More Efficient & Accurate Information Interchange
Filings & Reporting
Research Documents
Leveraged Development
Calculations
Processing
Software Interoperability
ERP and Financial Systems Integration
Government Systems Integration
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13th XBRL International Conference

18. Benefit to Business and Government
Timeliness
Accuracy
Efficiency (lower cost )
Ease of entry in Compliance
Consistency of multiple reporting
More opportunity for re-use of data
Better relationship between Business and Government
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13th XBRL International Conference

19. Reduction of the Cost of Compliance
Business
Reduce possibility of penalties or fines
Reduce reliance on Tax Specialists and Intermediaries
Reduce barriers to entering the market
Government
Reduce errors from inconsistency of reporting and re-entry
Reduce late filing or non-compliance
Software Development
Reduce diversity of interfaces
Reduce inconsistency of data semantics
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13th XBRL International Conference

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Getting There
Collaboration
Parties with overlapping information requirements
Evolving standards with overlapping coverage
Adoption
Understanding of options and coverage
Involvement in the process
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13th XBRL International Conference

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OASIS TaxXML Approach
International resource of tax knowledge comprised of representatives from Government, Business and software development
Look to evaluate, influence, specify and recommend XML specifications and standards as they relate to the processes and information exchanges involved in tax compliance.
Reliance on incorporating XML standards already defined for the common business vocabulary.
The benefits sought by The Committee include reductions in development of jurisdictionally specific interchange standards for software developers and tax administrations.
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13th XBRL International Conference

22. Impact on Software Developers
Continuous involvement in the Standards Process to be aware of business and technical directions and to provide perspective and requirements of software development to the evolution of standards.
Acceptance of adopted standards and ability to deliver solutions using available standards
Change the paradigm from design, build and control proprietary interfaces to incorporation and internal management of open standards.
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13th XBRL International Conference

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Questions
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13th XBRL International Conference